Kovan residential site draws top bid of $194.6m

Business Times: Thu, Jan 19

(SINGAPORE) Suburban sites continue to receive keen interest in spite of market cooling measures and the wider economic uncertainty.

Yesterday’s tender closing for the prime residential site at Kovan Road/Simon Road garnered 11 bids, of which a consortium comprising Hoi Hup Realty, Investment Focus, and Oriental Worldwide Investments emerged the top bidder.

Its bid of $194.6 million translates to about $507 per square foot per plot ratio (psf ppr).

Credo Real Estate executive director Ong Teck Hui noted that the top bid is ‘roughly in line’ with recent tenders for residential sites in Clementi ($554 psf ppr) and Mt Vernon ($495 psf ppr).

This, he said, ‘appears to be the current land price range for good suburban residential sites’.

The site, which has a 99-year lease period, has an area of about 1.7 hectares, and a gross floor area (GFA) of about 384,142 square feet.

‘The healthy list of bidders from this and recent tenders shows that developers are confident, and that their balance sheets are strong enough to weather through concerns that the ABSD (additional buyer’s stamp duty) will lead to abject market conditions,’ said Alan Cheong, head of research at Savills Singapore who estimated the project’s breakeven cost to be about $980 psf.

Lee Sze Teck, senior manager of research and consultancy at Dennis Wee Group, added that the keen contest shows that attractively located sites will continue to draw strong participation from developers despite the uncertain market conditions.

‘The breakeven for the site could be between $900 and $1,000 psf . . . The developer could be looking at a price range between $1,100 and $1,300 psf,’ he added.

According to a spokesman from Hoi Hup, the consortium intends build a condominium comprising fewer than 400 units. They include a mix of Soho-style units and townhouses.

The project should be launched later this year.

The tender’s second highest bidder was a group made up by Frasers Centrepoint’s FCL Topaz, F E Lakeside and Sekisui House Singapore. Their bid of $192.8 million translates to some $502 psf ppr.

Li Hiaw Ho, executive director at CBRE Research, expects units on the site to fetch between $1,100 and $1,200 psf, citing the location’s strong attributes.

‘The site is less than five minutes’ walk to Kovan MRT station on the North- East Line. It is surrounded by an established landed housing estate and low-rise apartments or shophouses. Kovan Melody and Kovan Residences are also situated nearby. Shopping and retail outlets are available at Heartland Mall-Kovan and Hougang HDB estate,’ he said.

SLP International research head Nicholas Mak noted: ‘There has been no new major condominium launched in the Kovan area since the launch of Kovan Residence in June 2008. After the sale of this site, there is also an absence of another major condominium development site near the Kovan MRT station.’

Other bidders included UOL unit, United Ventures Development, which placed a bid of $180.8 million ($436 psf ppr), and Mezzo Development, which submitted the lowest bid of $128 million ($333 psf ppr).

Source: Business Times © Singapore Press Holdings Ltd.

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